Old Mutual Int’l suffers amid sharp decline in Qrops sales

Added 11th August 2016

Old Mutual International saw a sharp drop in sales of qualifying recognised overseas pension schemes (Qrops) following the introduction of UK pensions freedoms in April last year.

Old Mutual Int’l suffers amid sharp decline in Qrops sales

As a result, and along with challenging economic conditions in many of its core markets, the insurance giant saw net client cash flows for its international business plummet by 33% in the first-half of 2016 to £200m ($260m, €233m), down from £300m in 2015.

This compares to net client cash inflows (NCCF) for the parent company as a whole increasing 39% to £3.2bn from £2.3bn.

Funds under management (FUM) for the international arm increased by 6% to £16.9bn compared to last year where it stood at £16bn.

“This has been a challenging six months for Old Mutual Wealth, and the whole industry, with volatile markets dominating the first half of this year, indeed it was the worst period for net retail flows for the industry in 20 years,” said Old Mutual’s chief executive Paul Feeney.

Old Mutual Wealth said it is looking to “transform the way that international offshore business is conducted, by supporting advisers and helping them understand how the combination of regulatory convergence and shifting client expectations are creating new opportunities”.

In March, the company acquired Singapore-based expat-focused financial advisory firm AAM Advisory as part of its plans to concentrate the Old Mutual International business on only two core markets in north and southeast Asia.

Operating profit

Old Mutual Wealth, the parent company of Old Mutual International which is in the process of splitting its business into four units, said first-half adjusted operating profits (AOP) were down 31% year-on-year amid turbulent equity markets and wide swings in the rand and pound exchange rates.

The insurer said AOP for H1 2016 was £104m, down from £151m in 2015, despite gross sales seeing an increase of 16% from £9.8bn to £11.3bn.

Africa’s largest insurer added that its UK financial advisory arm Intrinsic secured increasing fund flows, accounting for a 33% increase in NCCF to its platform, as well as adding 26% to Old Mutual Global Investor.

OMW Italy sale

The results come just days after the insurance giant announced the sale of its Italian business to European private equity firm Cinven for €278m (£236m, $308m), the “final part” of its plan to split the company into four separate units by 2018.

The cost-cutting exercise will include separating the firm into South African bank Nedbank, UK wealth manager Old Mutual Wealth, OM Asset Management and Old Mutual Emerging Markets, as it believes they will perform better independently.

Heritage closed book

In July, the life insurer confirmed it was cutting exit fees from 5% to 1% for all customers aged 55 or over on traditional UK pension contracts ahead of the Financial Conduct Authority’s (FCA) proposals to adopt a similar regime.

The move cost Old Mutual’s closed Heritage book £21m leading to overall lower operating margins.

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Monira Matin

Senior Reporter

Monira joined International Adviser in March 2016 from Informa Global Markets where she worked as a eurobond reporter for over two years, covering fixed income markets. She has previously held a number of editorial positions covering politics, insurance and technology. Monira has a degree in Journalism and Economics from City University.

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